Uncertainty in the Chemical Industry | Spot-Chemi blog
The chemical industry is facing uncertain times; the future price of oil is unclear, the major growth regions of the Far East are cooling, regional chemical legislation (such as REACH, TSCA, K-REACH, etc) is threatening to swamp the industry with red-tape, while the massive mergers of Dow/DuPont, ChemChina/Syngenta and others are creating research and production cuts across a range of sectors. And no one knows when all the changing will end.
At least that is the take-away package being offered by a recent PwC report on the future of the chemicals industry. A report that paints a gloomy picture for global economic growth, and warns that the chemical industrywill face some difficult years ahead.
As the report states, “ The structural headwinds in the chemicals industry are blowing like a gale out of the global economy. In a funk since peaking in 2007, global economies have been unable to reach the 35-year GDP growth average of 3.5% in six of the past eight years. And the two years of ‘high’ growth were more of a bounce back from the sharp downturn of 2009 than precursors of a sustained turnaround.”
It continues to outline how this will impact the chemicals industry, stating, “Within a problematic macroeconomic environment, made worse for many multinationals by the strong dollar, demand for chemicals has fallen. Overall industry sales growth increased an anemic 2.1% in 2016 as the sector faced declining industrial production and broad inventory rightsizing by many of its customers. Chemicals companies that sell petroleum-based products often fell short of these industry averages because lower oil prices led to sharp top-line declines, sometimes in the range of 30% to 40%.”
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